PSU

Description

PSU abbreviated as Public Sector Undertaking is a company owned by the union government of India, or one of the many state or territorial governments, or both. A characteristic feature of such type of organization is that the stock needs to be majority-owned by the government to be a PSU. PSUs in India are classified Maharatna, Navratna and Miniratna. In 1952 there were only a few of say five PSUs in India, but this number was suddenly increased to 246 by March 1992.

ยท         Maharatna PSUs: Presently SAIL, ONGC, NTPC, CIL, IOCL, BHEL and GAIL have been given the title of Maharatna. This status is given to the PSU which lies in the top public sector enterprises where the companies have the authority to carry out foreign investments of up to Rs. 5,000 crores without asking the government for any approval. But be conferred with the title of Maharatna net profit of over Rs. 5,000 crores annually needs to be earned and also to achieve a turnover of Rs. 25,000 crores.

Navratna PSUs: The status of Navratna is generally given to that company which qualifies to obtain 60 marks out of 100. The marking is generally based on six parameters which include total manpower ,net profit to net worth, cost to total cost of production Profit before depreciation, interest and taxes to capital employed, Profit before depreciation, interest and taxes to capital employed to turnover, Earning per Share and performance of that company amongst the other PSUs. In the initial phases it is a Miniratna having four directors which act independently in the council. They have the freedom to enter joint ventures, form float subsidiaries and alliances from abroad. The status enhances the financial and operational autonomy and empowers to invest up to
Rs. 1000 crores or about 15% of their net worth on a single project without seeking approval from the government.